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British oil major BP said it has reached a deal with the Iraqi government on the technical terms to redevelop the Kirkuk oil and gas fields.
The company had signed an agreement with the Iraqi government in August to develop and explore the Kirkuk oilfield in the north of the country, including building power plants and solar capacity.
Iraq, the second-largest oil producer in the Organisation of the Petroleum Exporting Countries after Saudi Arabia, has the capacity to produce nearly 5 million barrels per day.
"Today's signing is an important step toward a fully termed contract," BP Executive Vice President William Lin said in a statement. The company said negotiations are expected to be completed early in 2025.
Unlike historic contracts that offer foreign companies razor-thin margins, the new agreements are expected to include a more generous profit-sharing model, sources have told Reuters.
A BP spokesperson, asked for more detail on the technical terms and whether the fields will be redeveloped according to a technical service contract or a profit- or production-sharing model, said she had no further information to share.
BP was a member of the consortium of oil companies that discovered oil in Kirkuk in the 1920s. BP has estimated that the Kirkuk field holds about 9 billion barrels of recoverable oil.
The company holds a 50 per cent stake in a joint venture operating the giant Rumaila oilfield in the south of the country, where it has been operating for a century.
The Iraqi government did not immediately respond to a request for comment. -Reuters